Goodyear Tire & Rubber Company
I recommend buying Goodyear (GT), a global tire manufacturer, which currently trades at $31.50 per share. I believe the stock is undervalued by 40%-50%, with a price target of $47 per share. The company has a 4 to 5 year runway for substantial return potential due to: (1) robust auto sales which translate into replacement tires within 4 to 5 years; (2) reduced risk within the company; (3) strengthening business operations and (4) increasing dividends and share repurchase programs.
Goodyear is the third largest global manufacturer of tires, with a market share of 9.2%. The industry is highly concentrated among Bridgestone, Michelin, and Goodyear, with a combined market share of…
d. What was the company’s operating cash flow?
e. If operating capital in the previous year was $24 million, what was the company’s free cash flow (FCF) for the year?
f. What was the company’s economic value added?
2. As an institutional investor paying a marginal tax rate of 46%, your after-tax dividend yield on preferred stock with a 16% before-tax…
way back to 2005 to reflect both good and bad times in the market in our calculations. Equity beta is calculated by taking the covariance of the change in percentages for IBM and the S&P and dividing it by the variance in the percentage change in the S&P. Equity beta, also known as “levered beta” is the beta of the firm with financial leverage, and is used to determine the asset beta of the firm. The asset beta, also known as “unlevered beta” is calculated by taking the equity beta, calculated…
cash flow stream; and (3) riskiness of the cash flows.
F. What is free cash flow?
A measure of financial performance calculated as operating cash flow minus capital expenditures. Free cash flow (FCF) represents the cash that a company is able to generate after laying out the money required to maintain or expand its asset base. Free cash flow is important because it allows a company to pursue opportunities that enhance shareholder value. Without cash, it is tough to develop new products,…
finance the school I would like to attend, the first thing I would do is check the current price of Apple’s stock using Yahoo! Finance, and figure out how much I would have if I were to sell all 1,000 shares that I own. As of 6/3/2016 at 10:15am, Apple’s stock is valued at $97.63 (Yahoo! Finance, 2009). Therefore, if I were to sell my 1,000 shares of the stock, I would have approximately…
Team A Week 5 Problems
PE-2, page 862
In January 2012, the administration of Sarah Company determined that it has
money to buy transient investments in debt and stock securities. In the
course of the year,
these are the transactions that happened.
Purchased 1,200 shares of NJF common stock for $50,600 plus
fees of $1,000.
Purchased 500 shares of SEK common stock for $18,000 plus
fees of $500.
Purchased 70 $1,000, 8% CRT…
Discuss the efficient market hypothesis and its relevance with the investment management strategies. (10 marks)
The Efficient Market Hypothesis (EMH) is an investment theory that states it is impossible to “beat the market” because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information.
The paradox of efficient markets is that if every investor believed a market was efficient, then the market would not be efficient because there would be…
b) Why is company B’s ROE so much higher than company A’s? Does this mean that company B is a better company? Why or why not?
c) If companies A and B were combined (merged), what would be the impact on the results on ROE? Under what conditions would such a combination make sense?
d) What is the net income during the project period?
e) Compute the net cash flow from the project during the first year.
Problem # 3 : Table 3 summarizes the financial conditions for Apple…
Fungible Treasury Bills (T-Bills)
Fungible Treasury Bills (T-Bills) are government short-term debt securities issued by way of invitation to tender. A fungible security can be issued, the first time, in form of a fixed size then subsequent issues are matched.
Every new security issued is attached to the previous with the same characteristics (nominal unit, maturity date, basis for interest calculation). Only rates and issuance dates change.
Fungibility increases the size of…